As per data from the Annual Survey of Industries, there are about 3,300 small, medium, and large units in the country, with the organized-to-unorganized sector ratio being 20:80. Around 3.5 million people are directly and indirectly associated with this industry.
New Delhi: On Friday, on the occasion of the 79th Independence Day, the Prime Minister Narendra Modi announced that people would be given relief in GST this coming Diwali. Following this announcement, a wave of happiness spread among the general public as well as traders across the country. Meanwhile, FIPPI has also appealed for a reduction in GST on wood panel products and has written a letter to the Ministry of Finance, Government of India.
According to FIPPI, the Indian plywood and panel sector plays a significant role in the country’s economy. Wood panels are used in allied industries such as furniture manufacturing, interior design, and real estate. The industry depends on agroforestry for its raw materials and is an important source of income for farmers.
As per data from the Annual Survey of Industries, there are about 3,300 small, medium, and large units in the country, with the organized-to-unorganized sector ratio being 20:80. Around 3.5 million people are directly and indirectly associated with this industry. In 2022-23, the market size of the industry was approximately ₹27,000 crore, growing at a compound annual growth rate (CAGR) of 14.2% between 2018 and 2023.
According to FIPPI, the mandatory Quality Control Orders (QCO) implemented from February 2025 for plywood and panel products have encouraged the production of high-quality, standardized goods. This will reduce import dependency, boost domestic manufacturing, and increase the demand for agroforestry-based raw materials.
FIPPI points out that about 92% of the wood used comes from “Trees Outside Forests” (ToF) or agroforestry, benefiting over 1 million farmers. However, agroforestry-sourced wood is taxed at 18% GST, whereas unprocessed agricultural products are exempt from GST and processed/packaged food items attract a concessional GST rate of 5%. This disparity discourages farmers from adopting agroforestry.
Environment-friendly products generally attract lower GST rates, but wood panels are taxed at 18%, the same as non-sustainable alternatives like acrylic, PVC, and wood-plastic composite materials. Reducing the GST rate on wood panels would promote the use of sustainable materials and align policy with the nation’s environmental commitments.
FIPPI hopes that if GST on wood panels is reduced, it will not only encourage agroforestry but also help formalize the plywood and panel industry and contribute to tackling climate change.
For context, the Federation of Indian Plywood and Panel Industry (FIPPI) is the apex body representing manufacturers of plywood, medium-density fibreboard (MDF), and particle board across India, working to promote the interests of the wood-based manufacturing sector and serving as its voice in policy and regulatory matters.